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S.C. CHIMCOMPLEX S.A. BORZESTI

MANAGEMENT REPORT OF THE BOARD OF DIRECTORS

FOR THE FINANCIAL YEAR 2018

Company name: S.C. CHIMCOMPLEX S.A. BORZESTI

Registered office : Onesti, Industriilor street no. 3, Bacau county

Telephone: 0234/302100

Fax: 0234/302102

VAT number: RO 960322

Trade Register Number: J04/493/1991

LEI Code : 549300FCIHJZOG56WD36

The market on which the shares are traded: Bucharest Stock Exchange - ATS AeRO

Business object: Manufacture of other basic inorganic chemicals

Subscribed and paid share capital according to the Trade Register: 296,504,060.58 lei

The main characteristics of the securities issued by the company: the share capital is divided into

235,320,683 shares with a nominal value of 1.26 RON / share

I. COMPANY BUSINESS REVIEW

- Description of the core business of the company

The core business of the company, according to CAEN codification is 2013 – manufacture of other basic inorganic chemicals.

The activity that holds the biggest share in the company's income is the production of basic inorganic chemicals.

On 7 December, 2018, Chimcomplex SA Borzesti acquired from Oltchim SA the assets (intellectual property rights, land, constructions, movable assets, investments in progress) related to the plants for chlor-alkali, propylene oxide, polyether polyols, oxo-alcohols, monomer, PVC I , utilities, wagon yard, located on Ramnicu Valcea industrial site. The transaction value was 589,328,986 lei, excluding VAT.For the business from Ramnicu Valcea, the Ramnicu Valcea branch was founded, without legal personality. The main products manufactured by S.C. CHIMCOMPLEX S.A.are: 1. Chlor-alkali products: caustic soda solution 50%, caustic soda flakes, technical sodium hypochlorite, synthesis hydrochloric acid, liquid chlorine, liquid chlorine packed in cylinders; 2. Inorganic chlorides: calcium chloride solution, technical calcium chloride, lime chloride, ferric chloride; 3. Alkylamines: isopropylamine, methylamines; 4. Other products: demineralised water, reconcentrated sulfuric acid, ammonia water; chlorocholine chloride to these being added as of December 8, 2018: 5. Macromolecular products: polyether polyols for polyurethane foams 6. Organic synthesis products: propylene oxide, propylene glycol, oxo-alcohols

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a) Company’s date of establishment:

The company CHIMCOMPLEX was founded in 1990, based on the Government Decision no. 1200 dtd.

12.11.1990, by division from Petrochemical Complex Borzesti and taking over the entire patrimony of

Chemical Complex Borzesti.

On 15 March, 1991, it was organized as a trade company with full state capital and registered with the

Trade Registry Office under no.J04/493/1991.

The company was privatized in 2003 by signing the sale-purchase agreement on 9June, S.C. A2

IMPEX SRL Ploiesti taking from APAPS (AAAS) a total of 63,240,247 shares, at a nominal value of 2.5

lei (RON), representing 94.7465% of the share capital of the company at that date.

On 31.12.2018, the share capital of Chimcomplex SA Borzesti is 296,504,060.58 lei, divided into

235,320,683 shares with nominal value of 1.26 RON / share, according to the records of the Trade

Register of the Court Bacau.

b) Description of acquisitions, upgradings and/or divestitures from the patrymony:

The most important acquisition in 2018 is that regarding the acquisition of assets (intellectual property rights, land, construction, movable assets, investments in progress) from Oltchim SA in December 2018 related to the plants for chlor-alkali, propylene oxide, polyether polyols, oxo-alcohols, monomer, PVC I, utilities, wagon yard.

The assets taken over from OLTCHIM entered the Chimcomplex patrimony at the acquisition value, plus the other expenses related to the transaction, the total amount being of 645,477,083 lei, of which:

o Intelectual property rights 223,997 lei o Land 27,970,940 lei o Special constructions 69,444,749 lei o Buildings 67,897,036 lei o Process equipment 355,397,366 lei o Measuring and control devices and units 39,563,570 lei o Means of transport 46,193,745 lei o Furniture, office equipment, protective equipment 1.538.805 lei o Investments in progress 37,246,875 lei

During 2018, at Borzesti were made entries of assets through acquisitions and modernizations,

commissioning of the investments in progress at buildings, constructions, plants, equipment, measuring and control devices, means of transport and office equipment, such:

- special buildings and constructions: 391,669 lei, of which :

- special buildings, constructions 178,641 lei - sewerage 108,804 lei

- plants, equipment, measuring and control devices, transport means: 3,221,456 lei, of which: - telephone exchange 126,954 lei - relay and substation test system 70,535 lei - electropumps 56,805 lei - crane 634,263 lei - turbocompressors 146,787 lei - electrolyzer 906.199 lei

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- measuring and control equipment 193,673 lei - railway engine 462,172 lei - furniture, office equipment: 87,995 lei

Regarding the divestures of assets from the patrimony, during 2018 there were divestures amounting to

6,615,426 lei, of which : - by wagons selling 6,078,408 lei

1.1.1 Items of general assesment Considering that the assets of Ramnicu Valcea were purchased at the end of 2018, conditions in

which the Ramnicu Valcea Branch carried out activity for Chimcomplex SA in 2018 only 3 weeks (8 December - 31 December 2018), the data and information will be presented in this report per total Chimcomplex SA, only the synthetic data being presented for the activity of the Ramnicu Valcea Branch, which are inconclusive for an annual activity.

Main indicators achieved in 2018: -lei-

Total turnover, of which: 294,300,863

sold production 285,927,969

of which, export 139,830,152

Operating income 343,745,186

Total operating expenses, of which: 291,518,088

raw materials and materials, 96,136,798

of which natural gas 35,011,161

utilities (power, water, gas) 59,434,804

personnel 64,216,133

transport 12,422,694

amortizations 15,316,452

third party services 25,883,622

Operating result 52,227,098

Total financial income, of which: 4,254,572

exchange rate differences 3,807,520

Total financial expenses, of which: 17,515,396

interests 9,617,025

exchange rate differences 7,898,371

Gross result 38,966,274

Net result 32,686,389

Market share held by the company:

Borzesti: Compared to the production capacities of chlor-alkali in Europe, which currently are 11,225 thousand tons / year, the production capacities of Chimcomplex SA Borzeşti are below 1%, the market share held in the South Eastern Europe region being significantly higher.

On the domestic market, the company holds significant market shares for the products of the

manufacturing range: chlor-alkali 65-70%, inorganic chlorides 80%, alkylamines 90%. Valcea Branch: The short time of operation during 2018 does not allow to establish a market share for the products manufactured.

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1.1.2. Evaluation of the technical status of the company

Description of main products/services Borzesti:

Chlor-alkali products: caustic soda flakes and solution, liquid chlorine, hydrochloric acid, sodium hypochlorite;

Inorganic chlorides: ferric chloride, calcium chloride, lime chloride; Alkylamines: methylamines, isopropylamine;

Other products: chlorocholine chloride Summary of main products manufactured: Chlor-alkali products Caustic soda solution is used in the chemical industry for the manufacture of soaps, detergents,

pesticides, fertilizers, bleaching agents and for the regeneration of ion exchangers, in the petrochemical industry for the refining of petroleum products, in the wood industry, in the textile industry for the production of pulp, viscose, in the sugar industry, in the oils industry for their purification of free fatty acids, in the aluminum industry.

Caustica soda flakes has similar applications as caustic soda solution, but has the advantage of lower cost of storage, handling and transportation.

Liquid chlorine is used in the chemical industry for organic and inorganic synthesis, chlorine-rubber production, plastics, dye synthesis, pesticides, pharmaceutical industry, bleaching of paper, chlorination of water.

Hydrochloric acid is used in the chemical industry for the manufacture of inorganic salts, fertilizers, resins and dyes, in the pharmaceutical industry, in the metallurgical industry for pickling and degreasing, for the reclaiming of ion exchange resins in water demineralization plants.

Sodium hypochlorite is used as a brightening agent for textiles, detergents, pulp and paper, in organic oxidation processes, oil refining, water disinfection and sterilization of sanitary facilities.

Inorganic chlorides Ferric chloride is used as a flocculant for the treatment of drinking and industrial water, for the

treatment of metallic surfaces, in the electronics industry in the manufacture of integrated circuits, chemical polishing and galvanoplasting of stainless steels, as a pigment for the decoration of ceramic objects.

Calcium chloride is used as a thawing agent for road maintenance during winter, as an anti-dust agent on unpaved roads, in the extractive industry (dusting control in mining, admixture to drilling muds), for transporting and storing ores during winter , as a drying agent in the cold technique, as an additive in the food industry.

Lime chloride is used in public hygiene as a deodorizing and disinfecting agent, in the pulp and paper industry as a bleach, in the textile industry.

Alkylamines Monomethylamine is used in organic synthesis to obtain insecticides, solvents, medicines, anionic

detergents, emulsifiers, dyes, polymers and polymerization catalysts, vulcanization accelerators, photographic substances.

Dimethylamine is used in organic synthesis to obtain emulsifiers, corrosion inhibitors, insect fungicides, solvents, medicines, ion exchangers, chemical fibers, polymers and polymerization catalysts, vulcanizing accelerators and photographic substances.

Trimethylamine is used in organic synthesis to obtain quaternary ammonium salts, choline hydrochloride, emulsifiers, insect fungicides, solvents, medicines, ion exchangers, dyes, detergents, photographic substances.

Isopropylamine is used as a corrosion inhibitor, in the manufacture of dyestuffs, in the manufacture of pharmaceuticals and pesticides.

Chlorocholine chloride – plants growth stimulator

Valcea ranch:

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Besides the chlor-alkali products: caustic soda flakes and solution, liquid chlorine, hydrochloric acid, sodium hypochlorite, within the branch there are also obtained: Macromolecular products:

Polyether polyols are used in the synthesis of unsaturated epoxy polyurethane resins, elastomers, adhesives, antifoams, in the manufacture of lubricants and brake fluids. Their most important application is the manufacture of flexible or rigid polyurethane foams. Polyurethane foams are obtained by block or linear foaming process.

They are used in furniture industry for upholstery, the automotive industry in various parts

(dashboard, steering wheel), automotive upholstery. They are also used for thermal insulation at low temperatures (refrigerators, cold rooms). Polyurethane foams are used in the manufacture of foam core for sandwich panels Organic synthesis products

Propylene oxide is used in the manufacture of polyether polyols for polyurethanes, propylene glycol, glycol ethers, specialty chemicals, brake fluid, fire extinguishing agents, synthetic oil lubricants etc.

Propylene glycol is mainly used in the production of antifreeze agent, polyether polyols, antifoams; the paint, lacquer industry, as a solvent for the production of printing dyes and laundry detergents, as a plasticizer for improving the processing capacity of plastics, in the cosmetic and pharmaceutical industries.

Oxo – alcohols: - octanol is used in the manufacture of plasticizers; manufacture of synthetic lubricants; manufacture of surfactants and antifoam agents; as a solvent for animal fats, vegetable and mineral oils; wetting and dispersing agent for textiles;

Isobutanol and normal butanol are used in: solvents in the nitrocellulose and alkyd resins lacquer industry; solvent for the manufacture of artificial skin; extraction agent for oils, medicines, perfumes; raw material for the production of hormones, vitamins; solvent for oven dried, urea and phenolic resin based varnishes.

a) the main markets, the share of the main products in these markets and the

distribution methods Borzesti: The main markets were: Romania 47%, European Union 35%, Middle East 6%, other regions 12%. Customers of the domestic market operate in the following branches of the national economy:

energy, chemistry and petrochemistry, aluminum metallurgy, food industry, iron and steel industry, extractive industry, road maintenance, water treatment etc.

The structure of the domestic market in 2018 is shown below:

Field % in total domestic sales 2018

Distribution 35

Metallurgy 38

Chemicals 8

Road maintenance 8

Water treatment 7

Energy 2

Food 1

Other 1

Total 100

Products are sold directly to end-users, or through companies specialized in the distribution of

chemicals.

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The sale of products through distributors provides the assumption of the risk of default of the final consumer, the financing of production through advance payments, logistic conditions (authorized means of transport for dangerous goods, warehouses), lower sales costs on more distant geographic markets, redistribution of products in small quantities to small consumers, market prospecting and product promotion.

Valcea Branch sales between 08 and 31 December 2018 were only to domestic customers.

b) Evolution of the share of the income resulted from the main activities performed, in the

total turnover achieved on locations:

Income from the sale of products Borzesti

2016 2017 2018

Chlor-alkali 73 77 82.5

Inorganig chlorides 12 11 11

Organic solvents 6 5 0

Alkylamines

8 6 6

Other products 1 1 0.5

(%)

Income from the sale of products Rm Valcea

Period

08-31.12.2018

Chlor-alkali 34

Polyether polyols 39

Oxo-alcohols 22

Other products 5

The value of the commodity output made in 2018, broken down by production units, is as follows:

2018

LOCATION VCO (thousand lei )

%

Borzesti 263,144 81%

Soda M 185,889 57%

Chlorine 39,860 12%

Organics 18,886 6%

Inorganic chlorides 18,509 6%

Rm. Valcea Branch 8 – 31.12.2018

63,620 19%

TOTAL 326,764 100%

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At Borzesti:

Year 2018 is distinguished by the significant increased value of the commodity output compared to 2017.

12 months 2017 = 235,927.6 thousand lei 12 months 2018 = 263,144.1 thousand lei balance = 27, 216.5 thousand lei (12 %)

The chlorochlorine chloride plant has been commissioned Production in 2018 compared to 2017 increased by:

- caustic soda flakes: 197%

- mono isopropylamine: 41%

- metilamine: 7%

- lime chloride: 14%

- hydrochloric acid: 5%

- ferric chloride: 4%

The value of the commodity output at Ramnicu Valcea Branch related to the period 08-31

December 2018 was 63,619,948 lei.

Utilization rate of the production capacities in 2018 was :

At Borzesti utilization rate of the production capacities was 69 %.

At Rm. Valcea Branch the utilization rate of the production capacities during 8 – 31 December 2018 was 69 %, the branch having reduced operating rates because of the holiday season on the external markets, where the deliveries are reduced during this period.

1.1.3. Evaluation of the procurement activity

Main suppliers of Chimcomplex Borzesti are:

PRODUCT FURNIZORI

Salt solution Salt mibe Tg. Ocna, Salt mine Rm Valcea

- through Oltchim SA;

Soda ash Ascom Bucuresti

Ammonia

Azomures Tg-Mures through Dafcochim

Tg -Mures

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Industrial lime Carmeuse Brasov

Lime stone Mezei Trans SRL Rupea

Liquid nitrogen Linde Gaz

Sodium metabisulfite Ando Dej

Propylene Rompetrol Rafinare; Bulrom –through

Oltchim SA; HIP Pancevo – through

Oltchim SA

Natural gases SNGN Romgaz Medias ; E-ON Energie

Romania

Electric power CET Govora SA ; E-ON Energie Romania

The relationships with the suppliers are of a traditional nature and they are proceeding within an integrated quality - environmental management system - ISO 9001: 2015, ISO 14001: 2015.

1.1.4. Evaluation of sales activity a) Description of the evolution of sales, sequentially on the domestic and / or external market and of

the medium- and long-term sales prospects

In 2018, the turnover of the company increased by 21% from 242.5 million lei in 2017 to 294.3 million lei.

Borzesti:

The basic products of the company are chlor-alkali: caustic soda, chlorine, hydrochloric acid,

sodium hypochlorite. The other product groups support the operation of the electrolysis plant by direct or indirect

consumption of chlorine and hydrogen. On the domestic market, sales of finished products worth 123.6 million lei increased by about

30% compared to 2017. Domestic sales accounted for 47% of total sales of finished products in 2018, the highest share having – chlor-alkali products and inorganic chlorides.

On the external market, product deliveries increased by 0.4% compared to 2017, reaching 139.8

million lei. Sales in the foreign market accounted for around 53% of total product sales in 2018. In total external sales, chlor-alkali and alkylamines account for the highest share.

The increase in Chimcomplex SA Borzesti sales was generated both by the increase in volumes of chemicals sold and by the increase in the price of caustic soda on the foreign market in the first half of 2018.

The structure of sales (in terms of value) on markets in 2018 was the following:

Product group Domestic market External market

Chlor-alkali 45% 55%

Inorganic chlorides 72% 28%

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Alkyilamines 32% 68%

Organic solvents 36% 64%

Other products 96% 4%

Total 41% 59%

The evolution of sales at Borzesti on markets in 2018 compared to 2017 is shown in the following

table:

2016 2017 2018

Product group Quantitative position

Value position

Quantitative position

Value position

Quantitative position

Value position

Chlor-alkali

Domestic market 44% 43% 45% 38% 46% 45%

External market 56% 57% 55% 62% 54% 55%

Inorganic chlorides

Domestic market 77% 64% 73% 69% 76% 72%

External market 23% 36% 27% 31% 24% 28%

Alkylamines

Domestic market 21% 26% 29% 35% 34% 32%

External market 79% 74% 71% 65% 66% 68%

Organic solvents

Domestic market 16% 10% 15% 12% 26% 36%

External market 84% 90% 85% 88% 74% 64%

Other products

Domestic market 98% 97% 96% 87% 97% 96%

External market 2% 3% 4% 13% 3% 4%

Valcea Branch – sales were only on the domestic market, there are no data to be compared to the

previous year. Chimcomplex Rm Valcea Branch sales during 08 – 31 December 2018 by products is as follows:

Product Quantity (to) Value (lei) Value (USD) Value (Euro)

CAUSTIC SODA SOLUTION TYPE 50% (lye) 3,861 7,413,082 1,813,909 1,593,183

SYNTHESIS HYDROCHLORIC ACID 465 116,085 28,405 24,949

SODIUM HYPOCHLORITE 628 301,009 73,654 64,691

I-BUTANOL 35 128,637 31,476 27,646

N-BUTANOL 60 263,062 64,369 56,536

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OCTANOL 1,081 4,774,540 1,168,283 1,026,121

POLYOLS 1,212 8,235,029 2,015,031 1,769,832

PROPYLENEGLYCOL 152 895,642 219,155 192,487

Other 0 1,114,299 272,658 239,479

Total 0 23,241,384 5,686,939 4,994,924

b) Description of the competitive situation in the business of the company, the market share of the

products or services of the company and the main competitors. Chimcomplex has a low market share in total foreign markets. However, market shares are

significant in regional markets. Competition on the regional market consists in producers in Central and Eastern Europe: Borsodchem Hungary, Anwil Poland, Spolana Czech Republic, Karpatneftehim Ukraine, PCC Rokita.

Goods from the chlor-alkali group produced at Chimcomplex are delivered mostly in Romania and in the Mediterranean through distribution companies, which acquire products from manufacturers worldwide and distribute them to end customers.

For the other product groups, inorganic chlorides and alkylamines, Chimcomplex has to face particularly the European producers, although there is an increasing number of Chinese imports on the export market targeted by Chimcomplex.

c) Description of any significant dependence of the company to a single client or group of clients

whose loss would have a negative impact on the company revenues. There are no clients or groups of clients whose loss would have a significant negative impact on the

company revenues. The company's clients fall into two categories: - strategical - clients with reduced negotiation power and low share in total sales, for which Chimcomplex

is the best supply solution. Strategic customers with a significant share of total sales (5-25%) are in a small number, and

between these companies and Chimcomplex there is a partnership and cooperation in terms of reciprocity. Valcea Branch – operation within Chimcomplex for only 3 weeks has not collected the data for the

description of points b) and c) above.

1.1.5. Evaluation of issues related to company’s employees/personnel The organizational structure of Chimcomplex - Borzesti site is hierarchically functional, having compartments properly sized with the volume and complexity of the activities, grouped on the basis of the functions criteria of the company. The activities are structured around the following fields of activity: General Management, Economic, Commercial, Production, Investments - Business. The activities of each function are carried out within the four departments through the specialized departments. In order to achieve the objectives of the organization, the company has specialized personnel for all fields of activity. Chimcomplex employees benefit from a professional and development work environment, fair work relationships, objective performance appraisal, personal safety and security. Employees also benefit from social protection measures, bonuses, etc. laid down in the Collective Labour Agreement.

Chimcomplex supports the training of future specialists, providing traineeships and internships for pupils and students, thus contributing to the continuation of the chemical industry tradition through educational institutions and creating premises for future generations of employees.

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Compared to 31.12.2017, the number of employees increased from 789 to 818, for all categories of personnel, both in the production departments and in the functional departments, as a result of the commissioning of new investments, the restarting of some factories, the increase in domestic / external deliveries.

Personnel structure by categories, is as follows:

Total Personnel 818 of which: Skilled workers 573

Foremen 44 Total TESA, of which 201

-management 43 -executive 158, of which:

110 with high education 48 with secondary education Evolution of the personnel number during the last 5 years:

Category 2014 2015 2016 2017 2018

Directly productive 395 410 410 419 429

Indirectly productive 92 100 109 109 124

Service 55 58 58 63 64

TESA 164 181 189 198 201

TOTAL 706 749 766 789 818

In 2018, Chimcomplex organized a series of changes to adjust the departments and personnel number to the business requirements such as:

- the establishment of the Anticorrosion Protection Workshop as a result of taking over the anticorrosive protection activity and the personnel from the service company PROTECTCHIM

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- in the Organic Unit merged the Acetylene - Tetrachloroethane - TCE Plants as a result of long term plants shut-down and the Plant of Chlorocoline - NMP was established as a result of the commissioning of the new investment.

- following the commissioning of the investment Chlorination Chamber 3 within the Lime chloride plant, the personnel chart of the Lime chloride plant was supplemented with 12 jobs of chemical operator;

- the personnel chart of Evaporation-Soda Flakes plant was supplemented by 16 jobs

the personnel chart of the Evaporation Plant - Soda Flakes was supplemented with 16 packer machinist jobs, and for Evaporation was supplemented with 1 pump man job;

- the personnel chart of HCl manufacturing was supplemented with 1 job of chemical operator at the Abosrbtion stage and at HCl-NaOCl Loading platform the personnel chart was supplemented with 1 job of packer;

- starting with 13.12.2018, following the decision of the Board of Directors no. 1 / 13.12.2018, in the organizational structure of Chimcomplex - Borzesti Platform, the following changes occurred:

Marketing – Sales office was redefined in Chlor-alkali Sales Office.

The Strategy, Investments and European Funds Division has been broken up: The Design Office has been subordinated to the Executive Director; The CRIR Office. Business Development and Investments Preparation and Commissioning Office. Access to Structural Funds merged into the Investment Development Office under the Executive Director.

Chimcomplex SA –Ramnicu Valcea Branch: As of de 31.12.2018, operate: 7 departments within the General Direction, 6 departments within the

Commercial Direction, 5 departments within the Economic Direction, 4 departments within the Safety in Operation Direction, 3 departments within Technical & Research Direction, 6 departments within the Maintenance Direction and 6 departments within the Production Direction.

Perssonel Structure on 31.12.2018 within Chimcomplex SA –Ramnicu Valcea Branch: Total Personnel 1247 of which:

Workers 901 Foremen 40 Total TESA, of which 306

- management 86 - executive 260, of which:

220 with high education 40 with secondary educationii Consolidated structure is as follows:

CHIMCOMPLEX employees

Total of which: Borzesti

Ramnicu Valcea

Total number, of which: 2,065 818 1,247

- skilled workers 1,472 573 899

- unskilled workers 2 0 2

- foremen 84 44 40

- TESA 507 201 306

Salaries expensies 61,136 53,994 7,142 thousand lei

Social insurance expenses 3,080 2,365 715 thousand lei

Following the acquisition of assets from SC Oltchim and the establishment of the Ramnicu Valcea Branch, starting with 13.12.2018, the organizational structure of the company changed significantly.

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The management of Chimcomplex is provided by:

CEO / General Manager - dr. ec. Stefan Vuza Deputy CEO/ Deputy General Manager. - dr. eng. Virgiliu Bancila Executive Manager Borzesti - eng. Dumitru Coman Executive Manager Ramnicu Valcea - eng. Victor Avram CCO/Commercial Manager - eng. Daniel Prisacariu Economic Manager Borzesti site - ec. Anisoara Alexa Economic Manager Ramnicu Valcea Branch - ec. Alin Smeu Deputy Commercial Manager - Ramnicu Valcea Branch (Oxo-alcohols) - eng. Armand Spiru – Ciobescu Deputy Commercial Manager - Ramnicu Valcea Branch ( Polyether polyols) - ec. Dan Moldovan Deputy Commercial Manager - Borzesti site (Chlor-alkali) - eng. Camelia Misoaga Maintenance Manager Ramnicu Valcea Branch - eng. Dorin Necsulescu Production Manager Ramnicu Valcea Branch - eng. Andrei Laurentiu Production Manager Borzesti site - eng. Mihai Dumitru

In S.C. CHIMCOMPLEX S.A. Borzesti there are two trade unions: Chimistul with a number of 633

employees and Ecotehning with a number of 132 employees. Chimistul Trade Union is representative. Within the Rm. Valcea Branch, three trade unions operate: Chimistul Oltchim Rm. Valcea, Speranta

Oltchim and Unirea. 1.1.6. Evaluation of core business impact on the environment

From the point of view of environmental protection, S.C.Chimcomplex S.A.Borzesti operates on the basis of the following authorizations issued by the regulatory authorities:

Integrated Environmental Authorisation no.1/10.01.2013, updated on 12.06.2018, issued by the Environmental Protection Agency Bacau, valid until 10.01.2023, subject to the provisions regarding the activity carried out and the environmental quality monitoring requirements.

Water Management Permit no. 1 / 07.01.2013, revised no. 81 / 19.04.2018, issued by Romanian Waters National Authority - Water Directorate of Siret Bacau, valid until 06.01.2023, provided that the provisions regarding the activity carried out and the requirements for monitoring the quality of the environment are met.

Greenhouse Gas Emissions Authorization (EGES) no.128/05.03.2013, updated on 01.09.2015, issued by the Ministry of Environment, Water and Forests, with a Plan for Monitoring and Reporting Greenhouse Gas Emissions/ 2018, approved by the National Environmental Protection Agency - Climate Change Department, with the obligation to update annually in August.

The compliance with the requirements of the Integrated Environmental Authorization No.1 / 2013, updated on 12.06.2018, is regularly reported to the control and regulatory authorities (Bacau Environmental Protection Agency, Bacau National Environmental Guard and Romania Waters National Administration - Basin Administration of Water Siret Bacau) and is checked at least once a year, the result of the checks being recorded in an inspection report.

During 2018, 23 site visits were carried out by representatives of GNM - Bacau County Commissariat and 2 verifications carried out by representatives of Romanian Waters National Administration - ABA Siret Bacau: in order to verify the compliance of Chimcomplex with the provisions of the Integrated Environmental Authorization no.1 / 2013 - updated on 28.08.2015, respectively 12.06.2018, of the Water Management Permit No. 1/2013 - revised with no. 110 / 30.04.2015, the legislation in force regarding the storage of the waste, the biocides regime, the site visit for verifying the documentation submitted for the review or issuance of regulatory acts (authorizations, agreements). No such nonconformities have been identified as a result of these checks.

The latest compliance check carried out by the representatives of GNM - Bacau County Commissariat took place on 20.11.2018 and the results of the audit confirmed that Chimcomplex complies with the provisions of the Integrated Environmental Authorization and the reporting obligations to the competent authorities.

Measurement and monitoring activity in the field of the environment included: monitoring the quality indicators imposed on the environmental factors of water, groundwater and air; waste monitoring; monitoring priority hazardous substances when evacuating in the Trotus River, into domestic and

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underground water; inspections to monitor environmental issues in the plants and tat the acceptance of maintenance and investment works to monitor compliance with permit requirements and legal requirements; the calculation of the amounts due to the Environmental Fund for emissions into the atmosphere, the quantities of packaging placed on the market with Chimcomplex products and for dangerous substances for the environment introduced on the national market, the study of the technical documentation subject to the environmental authorization for the realization of the investments, with the view to the verification and completion with the provisions of the environmental legislation that must be observed when carrying out the works. During 2018, the Environmental Management System documentation activity was carried on according to the requirements of ISO 14001: 2015 and recertification was carried out as a Quality-Environmental-HACCP Integrated Management System. There have been trainings with Chimcomplex personnel regarding their application, but also regarding the observance of the legal environmental provisions to avoid situations of non-compliance and the fines. Our company also has an interest in environmental issues that can occur to its customers due to the products manufactured by Chimcomplex. In order to limit the environmental impact of our products, Chimcomplex provides customers with information regarding the products and environmental protection measures when using labels, quality norms, application instructions, safety data sheets, training and technical support when buying products.

SC Chimcomplex aims to improve communication with environmental stakeholders, the local community, control and regulatory authorities , collaborators, etc., carrying out actions for the exchange of ideas, thematic debates etc. (direct meetings). In this respect, modernization works and investments with possible environmental impacts were carried out in accordance with the legislation in force, but also with informing the public and interested parties to highlight the interest and effort of S.C. Chimcomplex to comply with and enforce the legal provisions and to continually improve environmental performance.

Within Rm. Valcea Branch the documentation was submitted in order to transfer the following

authorizations from Oltchim S.A to Chimcomplex S.A. - Ramnicu Valcea Branch: - the partial transfer of the Integrated Environmental Authorization No.6 / 25.02.2015; - transfer of Authorization no. 38 / 01.03.2012 regarding the recovery of recyclable materials code

CAEN 3832 ; - transfer of Authorization no. 47 / 28.04.2010 on the carriage of dangerous goods by code CAEN

4941- Rev.2/6024-Rev.1 and freight transport by rail code CAEN 4920- Rev.2 ; - transfer of the Water Management Permit no.276 / 07.12.2016. The documents underlying the obtaining of the Greenhouse Gas Authorization have been prepared. Environmental monitoring has been carried out: water, air, soil, waste monitoring.

The Subscription of the use of the water resources or the hydro-energetic potential Nr.10 / 2018 with the running period 08.12- 31.12.2019 was concluded between the Romanian Waters national Administration-ABA Olt and Chimcomplex SA Borzesti on which basis the water management specific contributions were calculated.

The contract concluded between Oltchim S.A. and Geocycle on the transport and disposal of cake waste from polyether filtration was transferred (assigned).

Notifications were delivered regarding the need to conclude new contracts for wastewater discharged into the Chimcomplex SA - Rm. Valcea Branch network by the companies on the chemical platform. 1.1.7. Evaluation of Research and Development activity The research activity at Borzesti is carried out with the specialized personnel of the company, the main achievements of 2018 being the following:

1. Industrial testing and the completion of the tehnology for the production of Chlorocoline chloride 720 g/l (chlormequat, CCC) - a plant growth regulator used extensively in agriculture / horticulture / horticulture starting from laboratory technology;

2. Documentation on the use of 1,2-dichloropropane. Ammonolysis of DCP with ammonia (amine in our case) to obtain propylenediamine;

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3. Getting new products with the sodium silicate solution as the raw material. Documentation on obtaining of derivatives, namely: magnesium silicate; calcium silicate; zeolites; precipitated silica;

4. Testing and improvement of corrosion resistance of an antiscale compound for thermal transfer equipment / hydrochloric acid-based equipment - tests for making a modified formulation of the product Hydrochloride Carbamide with increased dosage of hydrochloric acid (Forte Hydrochloride Carbamide);

5. Increased quality of the finished product Ferric chloride by reducing the content of insoluble substances, improving the filtration / settling process.

The research activity at Rm.Valcea, is carried out with the personnel of the Research Center within the branch, the achievements being the following:

1. The development of the polyether purification technology for rigid foams with phosphoric acid and sodium acid pyrophosphate, in order to reduce the salt content according to the customers' requests.

2. Polyols from vegetable oils existing in Romania - preliminary documentation and experiments - aiming at the use of renewable raw materials.

1.1.8. Risk factors The management of the company constantly seeks to reduce the potential adverse effects

associated with risk factors on the financial performance of the company by defining the risk profile - the general presentation of all the potential risks affecting the company. The risk profile by combining, classifying, ordering, establishing interdependencies, analyzing causes / effects, severity and frequency as well as defining ways to mitigate the impact of all identified risks, is a key source of information in establishing the company's business strategy.

In order to effective and efficiently run the processes in the company in order to obtain products and services in accordance with the regulatory requirements in the field, with the legal requirements and the requirements of the client, it is necessary to identify the processes, their succession and their interaction and implicitly the risks generated by them.

By implementing the requirements of the new ISO 9001: 2015 and ISO 14001: 2015 standards, we have identified and assessed both the risks generated by the processes identified at the company level and those associated with the environmental aspects generated by the activities, products and services carried out and we have documented the management of these risks.

The management is bound to constantly monitor the risk register along with the program of measures to minimize them. Thus, at least once a year, process managers will systematically analyze the risks associated with the conduct of their activities and will develop appropriate plans to limit the possible consequences of these risks.

By nature of the activities performed, the Company is exposed to risks that include, but are not

limited to, the risks presented below: Capital risk management - the management's objectives are to protect the entity's ability to continue to provide benefits to shareholders and benefits to other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The company uses loans that are usually guaranteed by its assets. If the company can not generate adequate cash flows to cover its debts, it may suffer a partial or total loss of capital. A relatively small movement in the value of assets or incomes may result in a disproportionate, unfavorable or favorable movement in the value of the company's economic indicators. Capital risk management is done using the debt ratio indicator, which shows the extent to which equity provides the financing of the activity, indicating to what extent its medium and long-term commitments are guaranteed by equity. It is calculated as the ratio between medium and long term debt and total capital.

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Credit risk - represents the risk of financial loss to the company if one of the parties to a financial instrument contract fails to meet its contractual obligations. The exposure of the Company to credit risk is mainly influenced by the individual characteristics of each client so that a large customer base reduces credit risk. Liquidity risk - Prudent liquidity management involves maintaining sufficient cash and credit lines available through continuous monitoring of the estimated and real cash flow and by correlating the maturing dates of financial assets and liabilities. Considering the nature of its activity, the company aims to be flexible in terms of funding options, by maintaining credit lines available to fund operating activities as well as investment. Liquidity risk management is done using the current liquidity indicator that shows the extent to which the current debts of current assets (current assets) can be covered. Market risk The macroeconomic environment in general and the chemicals market, in particular, continue to be affected by the economic crisis, with negative consequences for the company potential of development. The market risks to which the company is subject include: currency risk in commercial and financial transactions and the price risk. Interest rate risk. The company may be subject to a risk that future cash flows will fluctuate due to fluctuations in market rates for interest rates on loans and cash held.

Economic risk. Any economic downturn generally affects negatively the value of a company, so that the return on investment in a productive company depends to a large extent on the economic conditions on the domestic and international market, the volume of orders received and the value of the contracts as well as changes in the prices of raw materials and finished products.

Impact of government laws and regulations. The company must comply with laws and regulations on taxation, planning, laws and regulations that by their application can have an effect of increasing expenditures and lowering incomes or rate of profitability: Taxation - The Romanian tax system is constantly changing and trying to consolidate and harmonize with European legislation. In this respect, there are still different interpretations of tax legislation. In some cases, the tax authorities may treat different aspects of taxation, including transfer pricing, in a different way, and calculate additional taxes and charges and interest and related penalties. Litigations – The company is subject to several legal actions in the normal course of business. Management believes that they will have no significant negative impact on the Company's financial performance and financial position. Environmental - Environmental regulations are in a development phase in Romania, and Chimcomplex did not record debts as of 31 December 2018 for any expected costs, including legal and consultancy fees , designing and implementing remediation plans in respect of environment. Economic, political and social conditions in Romania or other countries Company performance may be particularly affected by changes in legal, regulatory, and tax rules, as well as by general financial conditions at national and global level.

• changes in political, economic and social conditions in Romania and / or other countries in Central and Eastern Europe;

• changes in government policies or changes to laws and regulations or the interpretation of laws and regulations;

• change of the foreign exchange regulations; • measures that can be implemented to control inflation and interest rates; • changes in tax percentages or methods.

1.1.9 Prospects on company’s activity

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a) Presentation and analysis of all trends, items, events or uncertainty factors that affect or could

affect the company's liquidity compared with the same period of previous year.

In December 2018, Chimcomplex SA Borzesti acquired five asset bundles, out of the nine bundles offered in the bidding process, belonging to Oltchim SA.

This transaction marked the end of a very long process of selling the viable assets of Oltchim, which was insolvent since early 2013.

The sale of the assets took place in accordance with the reorganization plan drawn up by the company's judicial administrators.

The transaction value was 127 million EUR, excluding VAT, and Chimcomplex funding was provided by VTB Europe and Credit Suisse.

The bundles of assets purchased by Chimcomplex include the following plants: - Chlor-alkali; - Oxo-alcohols; - Polyether polyols, - Services; - Wagons; - VCM/PVC1.

Assets include land, buildings, investments in progress, intellectual property rights and other

movable assets, mainly representing machinery, equipment, technologies and any other similar goods required for the production process.

Chimcomplex SA Borzesti announces the launch of an investment plan for the chemical sites in Borzesti and Rm. Valcea to provide turnover growth to over 1 billion EUR in the following five years.

b) Presentation and analysis of the effects of capital expenditures, current or anticipated financial

position of the company compared to the same period last year. Borzesti: During 2018, the company made investment expenses worthing approx. 130 million EUR, and the

main objectives involved are presented below: - Acquisition of Oltchim assets; - Plants for the production of calcium chloride granules; - Plant for the synthesis of sodium silicate; - Rehabilitation of sewers; - Environmental protection works : robox blower at basins 21/2,3 at treatment house 019; - Works related to the maintenance / repair of the logistics infrastructure: capital overhaul of the railway engines, railway tanks rubber covering, manufacturing of monoblock axles for the wagons; - Rehabilitation of facilities/buildings and consolidation of pipelines bridge; - Endowment / replacement with/of electrical equipment, instrumentation, dynamic equipment,

etc.; In 2019, investment objectives in progress will be carried on and new projects will be initiated. The

total value of the investments planned for 2019 of 9,680 thousand euro, aiming at the construction / arrangement of new plants, capacity extensions, product range diversification, environmental protection and product safety, technological rehabilitation and endowment / replacement of machinery and equipment of assets, purchasing of assets.

Through the Investment Program proposed for 2019, CHIMCOMPLEX aims to continue the

investment objectives in progress of the 2018 program and the proposed new investments derived from the Strategic Program 2016-2020, among which we can list: - plant for the production of solid calcium chloride; - plant for the synthesis of sodium silicate;

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- increase in capacity at calcium chloride solution plant; - rehabilitation-restructuring of the hydrochloric acid at Hydrochloric acid Plant III; - extension of ferric chloride production capacity; - extension of sodium hypochlorite production capacity; - extension of production capacity of lime chloride -chamber C20/4; - continuation the works at Plastic Saleduct; - rehabilitation of Fire Fighting water network; - continuation of modernization at Electrolysis (membrane replacements, procurement of pumps, ion exchanging columns, H2 filter, etc.) - procurement of equipment for. continuation of modernization of Methylamine and Isopropylamine (pumps, control valves, ball valves, flowmeters, H2 compressor, etc.); - continuation of the rehabilitation works / systematization / endowments / replacements to infrastructure elements,installations and equipment (pipelines bridges, sewers, dynamic machines, reservoirs, pipelines, electrical and automation equipment, etc.); - further work regarding product safety and compliance with prescriptions / norms / regulations (reclothing of the raylway wagons axles, railway tanks rubber covering, etc.);

The 2019 investment program also includes the documentation / analysis / studies / / research /

testing for new investment projects in the strategic development program (eg new silicates, new amines, ferric sulphate , etc.).

One of the medium and long-term development opportunities of the company is the acquisition of assets that allow the production of new or complementary products. The most important action to be taken by Chimcomplex on this line is the acquisition of Somes Dej assets as strategic direction of the business to revive pulp and paper manufacturing. Ramnicu Valcea Branch:

The Investment Program of Ramnicu-Valcea Branch of CHIMCOMPLEX SA Borzesti for 2019 is in the amount of 19,446 thousand euro and includes the following investments:

1. Electrolysis 1:

The work is timely given the increase in the market demand for lye, with the requirement to reduce the cost of lye production by increasing the energy efficiency of electrolyzers, with the emergence of new generation electrolyzers with low energy consumption (2,035 KWh / t). Lower the electricity consumption by about 14% by introducing new generation electrolyzers, which will lead to savings by lowering electricity consumption. In the course of 2019 a budget of 1 million euro is proposed to be used for:

- Feasibility study for choosing the optimal electrolyzer replacement option and setting the costs,

duration and schedule for carry out the investment.

In functie de concluziile studiului de Fezabilitate se are in vedere contractarea:

- Basic and detailed engineering and development of technical specifications for new equipment - partial payment;

- Advance payment for the purchase of the equipment for the replacement of the Generation 2 electrolyzers with higher generation electrolyzers

2. Propylene oxide 1+2:

In order to strengthen the existing capacity it is necessary to operate the saponification phase with all 6

reactors and to make a spare line which allows the reactors 1 to 6 to be washed in order to clean the

saponifier. Continuous operation at the current production capacity of the Propylene oxide plant ensures to

achieve optimal costs and maximum economic and technological efficiency.

The following works are also envisaged, designed to ensure the maximum capacity of the propylene oxide

plant (PO) through:

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- installing additional heat exchangers for optimal heat recovery of waste water and for heating the

system water to the hydrochlorination phase and the water used as lime extinguishing agent,

- upgrading the distributed control system (DCS),

- consolidation the resistance structure of the Waste Water Treatment Plant – PO plant,

- works to better measure utility consumption,

- works to provide a reliable feed with lime milk and integrated heat exchange,

- a more reliable plant by providing new equipment to replace the initial obsolete one (new reactor for

hydrochlorination R-1-101/6, new condensers Ex-1-201/4 si Ex-1-201/6).

The value for the expanses related 2019 for this objective 1,5 million euro

3.Polyols:

The work is timely given the increasing market demand for grafted and rigid polyols, together with the need to reduce the cost of manufacturing them in existing plants. During the year 2019, expenditure of 2.6 million euro is foreseen for:

- Feasibility study to select the optimal option to increase the manufacturing capacity of special

polyols;

Depending on the conclusions of the feasibility study, contracting is envisaged:

- the design needed to finalize the detailed engineering and preparation of technical specifications for the new automation equipment - partial payments; - advance payment for the acquisition of equipment (reactors, automation equipment and DCS) required to increase the production capacity of special polyols; - the beginning of the construction and assembly works necessary in the new location for the production of the special polyols.

It is also envisaged to strengthen the current capacity to produce graft polyols through enhancing the reliability of the filtration system , starter polyether storage / dosing system for diols and triols in DMC catalysis, modernization of current polyether tank loading platform which implies acquisition and installation of: 4 articulated arms, 3 weight metering loops (3 coriolis counters + 3 automatic valves ON / OFF), execution of a new platform provided with roof for loading the road tanks with PP-452 graft polyether , in order to protect from weathering during the loading operation, finalizing the modernization of the Finished Product Warehouse Control Panel, which involves the systematization of the existing AMA equipment and the connection of the newly installed and future equipment (meters for the automotive ramps, pump pressure regulation) by upgrading the DCS (the work is started but not completed) , drawing up the project documentation (based on the existing project documentation / technical books) with ISCIR authorization and execution of a new neutralization autoclave, max. capacity 20 m3, working capacity 16 tons, made of stainless steel, equipped with heating jacket, for replacing the current very used autoclave from the Neutralization phase of the Polyethers plant, current psition RC-306, etc.

4. Sphere for propylene storage: an investment of 1.5 million euro needed to make more reliable

the operation of propylene oxide / polyols and oxo-alcohols plants by increasing the propylene storage capacity, raw material purchased from the propylene producers in Romania and abroad (as petrochemistry from Pitesti connected through the pipeline transfer of propylene to Rm.Vl, does not operate). For 2019, the consolidation of the concrete structure, welding works, gamma controls, LP, PM, US, heat treatment, electro-engineering works and pipe connections, as well as the approval with a certification body.

5. Ethylene oxide storage: the work is necessary to ensure the operation of polyols / polyethers

plants by increasing the storage capacity of ethylene oxide (EO), the raw material purchased from EO producers from abroad at very high distances (as Petrochemistry from Pitesti, which has EO plant and storage, is not in operation). In 2019 expenses of 2,5 million euro are foreseen for the following works:

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Manufacture of new ethylene oxide vessels

Transport of new ethylene oxide vessels

Equipment acquisition (pumps, heat exchangers, electrical equipment, automation equipment)

Construction and installation works (concrete works, sewerage, settled and drinking water, fire fighting water piping installation, electro-AMA equipment assembly, piping and equipment installation, access roads, metal structure, insulation)

ISCIR fees, permits, agreements, site supervisors, unforeseen expenses

6. DOTP plant: an investment of 1.5 million euro needed to ensure a continuous flow of production without failures due to syncope in the sale of the finished product octanol, the elimination of unplanned stops due to the lack of storage space of the manufactured and unsold octanol, when the international market is not favorable for octanol sale. The work is also required to eliminate the maintenance costs associated with the DOP plant and the use of this plant and of the qualified operating personnel by converting the DOP plant to DOTP, obtaining an environmental friendly plasticizer required by the polymers and rubber industry. In 2019 the following works are required:

Completion of detailed engineering

Acquisition of ATP transport and dosing system

Acquisition of pumps for reaction mass recirculation

Drawing up documentation for Ex zoning and INSEMEX authorization

C+M works and acquisition of related materials

Filter

Unforseen expenses

7. New gas pipeline / Cogeneration plant: for 2019 costs of 1 million euro are foreseen for the

realization of: feasibility study, the design and assembly of the pipeline for connection to the national methane gas network, the contracting of the basic and detailed engineering for the new Cogeneration plant, the payment of an advance for partial contracting (12-13 months) necessary to carry out the construction and assembly works of the new Cogeneration plant.

8. Utilities network:

In 2019 1.5 million euro are foreseen and the following works are envisaged: - Systematization of the steam main pipeline 13 ata Joint T-T6; - Systematization of the steam main pipeline 13 ata Joint P- Joint Zero - Joint X; - Performance of steam pipeline 30 ata Joint N-Joint P; - Systematization of settled water main line Joint Ao-Soda Block –Flakes; - Replacement of main pipeline of drinking water line A and B , DN 600 in the area Govora river; - Systematization of main pipeline of recirculated water GAR II -Soda Block- Flakes; - Replacement of main pipelines of recirculated waGAR III Joint I- feed joint propyleneoxided; - Rehabilitation of sewerage networks M24-M25 - 12 ml - DN 1200; CC49-CC50 - 24 ml - DN 600

M654-M655 - 12 ml - DN 1000;

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- Replacemen of polyethylene pipeline (PE 80 SDR 13,6Dn 500 x 36,8mm/ Pn 6) waste water pumping line Propylene oxide to Biological Treatment Plant;

- Upgrade DCS demineralized water Arionex plant; - Modernization of Water catching station Bistrita; - Systematization of the steam main pipeline 13 ata Joint T-T6, Joint P- Joint Zero - Joint X, Joint P; - Intermediate heat exchanger replacement between sola and pp-glycol SC2 (VAP 800S evaporator)

from the Cold unit by comppression -15°C Utilities with a with a multitube heat exchanger with heat transfer capacity of1 Gcal/h, etc.;

- Raw water pre-treatment facility study for the Arionex plant, etc;

9.Mercuy decontamination: Expenditure in the year 2019 is estimated at 1 million eur for feasibility study and necessary works according to the feasibility study.

10.Waste warehouses closure: In 2019, expenses of 1 million euro are foreseen for works

required by current environmental regulations which are referred to: - Closure of non-dangerous waste warehouses:

o Obtain construction authorization; o Site management and emplacement of warehouse body; o Final warehouse coverage (partial performance).

- Closure of dangerous waste warehouses: o Obtain construction authorization; o Site management and emplacement of warehouse body; o Completion of sealing screen; o Access roads to the non-dangerous warehouses; o Closure and greening warehouse (partial performance).

Environmental investment for water: Budgeted expenses 2019=1,8 mil. euro -Propylene oxide water: for 2019 the following works are foreseen: -Study for dehydration solution of PO/Pilot wastewater slam; -Modification of decanter body/refurbishment D 101/1,2; -Extension of chemical agents’ household; -Purchase of slam dehydration installation equipment (partial) - Refurbishment of Biological Station: for the year 2019, the following works are foreseen: - Establishment of existent and newly performed construction refurbishment. - Refurbishment of Final Control Station: for the year 2019, the following works are foreseen: - Establishment of feasibility study.

12. Other environmental investments: Reduction of powder emissions by a new chalk plant: for

the year of 2019, 1.5 million euro of expenses are foreseen and the following works are considered: - Feasibility study; - Purchase and establishment of basic engineering and detailing with technical specs for the long

cycle manufacture equipment purchase - Downpayment of partial equipment purchase. 13. Refurbishment, systematisations, valuing existent facilities, in amounts of 100.000 euro

For the year 2019, the following works are considered: Refurbishment of installs, buildings, propylene oxide, polyol, organic syntheses, electrolysis, etc. duct trestles.

14. Endowments, replacement of machineries and equipment, in amounts of 900.000 euro

For the year 2019, the following works are considered: - Other investments: endowments, replacement of chlorine-sodium equipment; - Other investments: endowments, replacement of propylene oxide, polyol, organic syntheses

equipment;

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- Other investments: endowments, replacement of OXO equipment. 2. COMPANY TANGIBLE ASSETS

According to the period in which they were built, installations/facilities may be grouped as follows:

- 1st generation facilities, commissioned till 1970 - 2nd generation facilities, commissioned in 1970-1980 - 3rd generation facilities, commissioned after 1980

After 1990, the aim was on the technological process refurbishment and the replacement of energy-

saving technologies, with the objective of reducing the manufacturing costs and improving the quality of the products.

In order to increase performance and meet market requirements, refurbishment and retrofitting of the installations was carried out.

The most important example is the retrofitting of the Membrane Electrolysis Plant by adopting the modern ion exchange membrane process, making the Soda M (Liquid Caustic Soda, Demineralised Water, Caustic Flakes Soda, PA Hydrochloric Acid) as DCS-monitored plants. The initial investment, the UHDE license, was commissioned in 1996, being retrofitted/refurbished, with the last investment being that of replacing it with the latest generation electrolysers.

Romania's accession to the European Union has influenced the chemicals market and has led to the ban of pesticides use and respectively, the cessation of herbicide, fungicide, insecticide synthesis.

As of 2007, a comprehensive program of retrofitting and upgrading the existing production facilities and auxiliaries has been started, as well as the establishment of new chemical and energy production capacities aimed to ensure the chlorine consumption implementing cost-effective products and significant potential increase in the level of technological and energy integration, reducing the external environment influences, especially in the energy resources plan, lowering the environmental impact and complying with the current legislative requirements, compliance with applicable norms/prescriptions/regulations.

The largest investment was made in December 2018 when Chimcomplex SA Borzesti acquired five asset packages from the nine packages quoted in the auction process belonging to Oltchim SA.

The transaction value was of 127 million EUR, without VAT, and the financing provided to Chimcomplex was provided by Credit Suisse and VTB Europe.

Assets include land, buildings, investments under construction, intellectual property rights and other tangible assets representing mainly machinery, equipment, technologies and any other similar goods required for the production process. The area surface owned on 31.12.2018:

Total: 3.783.491 sqm with a recorded value in the patrimony of 81.149.615 lei, emplaced as follows:

No. Emplacement/positioning Area (sqm)

Accounting value (lei)

1 Onesti, str Industriilor nr. 3 1.710.253 49.159.059

2 Sat Cazaci com. Tarcau, jud Neamt 41.679 1.411.787

3 Cluj 2.012 144.916

4 Somes Dej, Dealul Tirului, jud.Cluj 13.740 786.453

5 Pitesti, str. Caminelor, nr. 7, jud Arges 1.222 1.576.539

6 Bucuresti, bdul Ficusului, nr.44A, sector 1

39 99.921

7 Rm.Valcea 2.014.546 27.970.940

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The land from Onesti municipality is registered at the price of 8 euro/sqm according to the assessment made in March 2007 and the lands from Tarcau, Cluj, Dej, Pitesti, Bucharest and Valcea Branch are registered at the acquisition prices.

The company owns in the patrimony buildings worth 209,838,647 lei, technical installations and transportation means in amounts of 680,173,653 lei, furniture, appliances, office equipment in amounts of 2,761,526 lei, biological assets worth 53,514 lei (inventory values) and investments in amounts of 41,985,327 lei. 3. SECURITIES MARKET ISSUED BY THE COMPANY

The level of the social capital of a company as well as of the capital, expresses the size and

stability of the company, being one of the conditions for the registration of an adequate financial autonomy. According to confirmation of company details no. 101690/14.02.2019, on 31.12.2018, the

subscribed and paid up social capital is 296,504,060.58 lei, divided into 235,320,683 nominative shares, at the value of 1.26 lei/share.

As of 21.07.2015, the shares of SC CHIMCOMPLEX SA BORZESTI (CHOB) are traded on the securities market, within the Alternative Trading System managed by the Bucharest Stock Exchange, ATS Securities Listed Securities Division, Capital Securities Sector, Shares Class.

The increase of the social capital in 2018 was made by the completion on 27.03.2018 of the increase of the social capital disposed by E.G.M.S. Chimcomplex SA Borzesti from 08.05.2017, a process that took place in two stages. As a result of the subscription of the shareholders, the social capital of the company increased from 170,107,590.24 to 228,080,046.60 lei, the subscribed amount until 31.12.2017 was 22,680,078.12 lei, and during 01.01.2018 - 27.03.2018 the subscribed amount was 42,522,377.94 lei.

On 23.07.2018, the Extraordinary General Meeting of Shareholders of Chimcomplex SA Borzesti decided to increase the social capital by the amount of 68,424,013.98 lei through the issuance of 54,304,733 new shares with a nominal value of 1.26 lei/share, as well as the setting of 0 (zero) lei value for the compensating the fraction of shares resulting from the application of the algorithm and rounding the results to the nearest inferior whole number, according to current legal provisions.

The increase of the social capital was made by incorporating a sum of 68,424,013.98 lei from the reserves of the company, thus issuing 54,304,733 shares, with a nominal value of 1.26 lei/share, to the benefit of the shareholders registered in the Shareholders' Registry held by Depozitarul Central on October 30th, 2018, as established by the GMS. Therefore, during 2018, the social capital increased with the amount of 110.946.391,92 lei. On 31.12.2018, according to the recordings from Depozitarul Central, the major shareholder of the company is C.R.C. Alchemy Holding B.V. which holds a number of 206.548.832 shares, worth 260.251.528,32 lei, representing 87,7733% of social capital, and the Romanian State by The Authority of State Asset Administration (A.A.A.S.) holding a number of 21.670.779 shares, worth 27.305.181,54 lei and representing 9,2090% of social capital.

The synthetic structure of company shareholders on 31.12.2018 is the following:

Shareholders No. of shares

Value lei

% of social capital

CRC Alchemy Holding B.V. 206.548.832 260.251.528,32 87,7733%

A.A.A.S 21.670.779 27.305.181,54 9,2090%

LEGAL ENTITIES 6.261.032 7.888.900,32 2,6606%

NATURAL ENTITIES 840.040 1.058.450,40 0,3570%

TOTAL 235.320.683 296.504.060,58 100%

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The situation of participation held at other companies on 31.12.2018:

Participation titles at companies from the group

Balance at 31.12.2018 lei

Percentage held

A4 IMPEX ONESTI 4,733,030 99.999%

AISA INVEST SRL CLUJ NAPOCA 20,000 19.51%

UZUC PLOIESTI 1,680,000 0.5656 %

A5 INVEST SRL ONESTI 6,100,000 100%

A6 IMPEX SA DEJ 33,092,340 32.56%

Total 45,625,270

Other taxable titles Balance at 31.12.2018 lei

Association of Phytosanitary Products Producers

1000

Total 1000

4. COMPANY MANAGEMENT

From January 1st, 2018 to December 31st, 2018, the management and coordination of the activity at

SC Chimcomplex SA Borzesti was provided by a Board of Directors, consisting of: For the period 01.01.2018 -14.06.2018 - Eng. PhD VIRGILIU BANCILA, as chairman of the Board of Directors; - Ec. ANISOARA ALEXA, member of the Board of Directors; - Ec. LUCIAN COVRIG, member of the Board of Directors; For the period 14.06.2018-31.07.2018 – According to the decision no.1 OGMS of 14.06.2018 - Eng. PhD VIRGILIU BANCILA, Chairman Administrator of the Board of Directors; - Ec. ANISOARA ALEXA, Administrator - Ec. LUCIAN COVRIG, Administrator - Ec. PhD atty. STEFAN VUZA, Temporary Administrator - Eng. COJOC IULIAN LIVIU, Temporary Administrator For the period 01.08.2018-31.12.2018 – According to the decision no.1 OGMS of 14.06.2018 - Ec. PhD atty. STEFAN VUZA, as chairman of the Board of Directors; - Eng. PhD VIRGILIU BANCILA, member of the Board of Directors; - Ec. ILINCA VON DERENTHALL GEB.BERZA, member of the Board of Directors;

Synthetic structure of shareholders on 31.12.2018

CRC Alchemy Holding – 87,7733%

A.A.A.S – 9,2090%

LEGAL ENTITIES – 2,6606%

NATURAL ENTITIES – 0,3570%

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- Ec. STURZA ION, member of the Board of Directors; - Eng. COJOC IULIAN LIVIU, member of the Board of Directors;

The company executive management in 2018 was ensured by a team composed of the following: POSITION NAME SURNAME Seniority 1.General Manager Coman Dumitru 10 years 2.Economic Manager Alexa Anisoara 10 years 3.Trades Manager Prisacariu Daniel 10 years

4.Production Manager Dumitru Mihai 7 years

As per asset takeover from SC Oltchim and the establishment of the Ramnicu Valcea Branch, starting with 13.12.2018, the company managerial structure has been significantly altered. Company management Chimcomplex is ensured by:

CEO/General Manager - Ec. PhD Stefan Vuza Deputy CEO/ Deputy General Manager – Eng. PhD Virgiliu Bancila CEO Borzesti – Eng. Dumitru Coman CCO/Trades Manager – Eng. Daniel Prisacariu Economic Manager Borzesti Platform – Ec. Anisoara Alexa Production Manager Borzesti Platform – Eng. Mihai Dumitru Deputy Trades Manager – Borzesti Platform (Chlorine-Sodium) – Eng. Camelia Miso GMS

CEO Ramnicu Valcea – Eng. Victor Avram Economic Manager Ramnicu Valcea Branch – Ec. Alin Smeu Deputy Trades Manager - Ramnicu Valcea Branch (Oxo-alcohols) – Eng. Armand Spiru – Ciobescu Deputy Trades Manager - Ramnicu Valcea Branch (Polyols - Polyethers) – Ec. Dan Moldovan Maintenance Manager Ramnicu Valcea Branch – Eng. Dorin Necsulescu Production Manager Ramnicu Valcea Branch – Eng. Andrei Laurentiu

No member of the administrative, management or supervisory bodies has been convicted of any fraud committed in the last five years. 5. FINANCIAL AND ACCOUNTING SITUATION

At the establishment of the financial statements, the legal provisions in the following regulatory documents have been considered:

- Order no. 10 of 01.2019 on the main aspects regarding the establishment and submission of the annual financial statements and of the annual accounting reports of companies to the territorial units of the Ministry of Public Finance as well as for the modification and completion of certain accounting regulations

- Accounting Law no. 82/1991, republished with further completions and amendments; - Order of the Ministry of Public Finance no.1802 of 2014, for the approval of the Accounting Regulations on

the individual annual financial statements and the consolidated annual financial statements, with further completions, in force since 01.01.2015.

- Order of the Ministry of Public Finance no. 1.286/2012 for the approval of the Accounting Regulations in compliance with the International Financial Reporting Standards applicable to companies whose securities are admitted to trading on a regulated market.

- Order no. 2.861 of 2009 for the approval of the regulations regarding the management and performance of assets inventory such as assets, debts and equity;

- Order no. 1826/2003 of the Ministry of Public Finance for the approval of the guidelines related to certain measures on the accounting management and leadership;

- Law no.297 of 2004 on the capital market, with further completions and amendments; - Law no. 31/1990 on companies republished, with further completions and amendments; - Law no. 227/2005 on the Tax Code, with further completions and amendments, effective from 01.01.2016.

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- Other specific regulatory documents, such as those related to the implementation of the National Electronic System, with further completions and amendments, etc. MANAGERIAL ACCOUNTING

Information provided by managerial accounting, based upon the effect/effort report analysis, at each product level, give the possibility to form both the overview and detailed image of rendered activities, allowing managers to take decisions to adjust dysfunctionalities, remove deficiencies and render activities.

The economic result analysis achieved towards the ones foreseen is carried out by calculating, following, analysing and reporting deviation of effective costs on calculation items towards the previously calculated level.

Expense underlining by their economic nature: material and workforce expenses as well as their underlining by the distribution/participation to a new product establishment in: direct and indirect expenses, provides the company managers with the possibility to know thoroughly their contents and apply the necessary control and adjustment measures.

The data source for the financial and economic analysis is constituted by syntesis accounting documents: Balance, Profit and Loss Account and Balance Appendixes.

THE INFORMATION is an essential resource for managers because it influences directly at

decision making, also considering the general performances of the manager. The main designation of the information at exploitation level are as follows:

- control aimed towards the past; - coordination aimed towards the current activity and which imposes efficiency improvement; For 2018, an important objective was the implementation of Business Intelligence Project –

activity monitoring application.

Business Intelligence refers to the informatic identification, extraction and analyse systems of the available data from a company, systems of which purpose is to provide real support in business decision making.

The Business Intelligence informatic systems were considered until recently as instruments designed for managers – solutions providing a company manager with the necessary information to improve general performance. A BI operational system keeps this property and supports daily activities by specific functionalities: information updated in real time, secured access to data from any location, easily analysed and carried out by any user without specialised support etc. This change answers the crossing towards a new managerial culture, that of a clear objective management, measurable, assumed by the company and employees at each level. For this model to work, the employee must be able to make informed decisions to achieve his or her goal. Business BI intervenes in these companies, providing access to relevant information at every level and decision-making speed.

This concept translates into the availability of information in real time and from any location, access to the system for multiple categories of users and increased relevance.

Classical BI systems are mainly based on information obtained over longer intervals. This type of information is very important to see trends, issues, business areas that require improvement, and other important factors.

An operational BI also involves detecting trends, problems, and other factors as soon as they occur, allowing employees to resolve them immediately and not a few days when they can grow and may have a severely unfavourable impact on the company. Implementing such a system involves an organizational culture in which the employee's role is no longer just executable, he becomes a decision-maker. 1. Interactive data view

Analysing the data generated by a company's activities is a demanding activity that involves considerable time and human resources, especially if the volume of information is high. However, visual representations simplify things by allowing users at any level of the company to better understand the data they need to meet their goals. An operational BI system helps non-technical users with very fast and intuitive data processing and visualization methods, enabling people at every level of the company to ask questions and get answers in just a few seconds. With just a few simple steps you can get interactive dashboards easy to understand by anyone.

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2. Data access Latest BI systems can process and analyse a huge amount of data from a range of sources,

bringing consolidated information about articles, partners, cashflow, profit, discounts, fixed assets, stocks, etc. at a click away. No matter the volume of data, they can be represented and analysed through an unlimited number of views. Once viewed, trends or problems can be more easily noticed, and decisions are made much easier when information is presented clearly. Data analysis in a BI system is not limited to a few static charts over longer time intervals. These can be studied in detail, moving from an overview to a specific detail, making it very easy. 3. Exploring, understanding and discovering new information

When information is presented from the right perspective, new conclusions and answers can be achieved. An operational BI is simple, visual and easy to understand, giving people the freedom to answer questions as they appear. Viewing mode can be changed by just one click, depending on the needs of each user. The BI system can deliver interactive views in just a few seconds even when working with very large volumes of information. It allows users at different levels of the company to switch from data tables to interactive data views with just one click. They will then be able to explore, visualize and share information without specialized support. 4. Information notification

Making interactive views can take only a few minutes. These can be "assembled" into an interactive dashboard for an overall view that can be shared with other people. Depending on the BI system or the platform on which it is developed, dashboards can be shared with anyone via the Internet. They can interact directly with the dashboard: they can filter, sort and rearrange the information. Dashboards can also be shared by other methods: site embedding, blogging, can be used in presentations or exported in a static format, such as PDF.

INTERNAL/EXTERNAL AUDIT AND CONTROL

Regarding the internal control at SC CHIMCOMPLEX SA in 2018: it was carried out on the basis of

an approved plan by the Board of Directors, but it also had specific actions at the request of the management. Control activities are an integral part of the management process through which the entity pursues the objectives.

Internal audit missions aim towards ensuring the following: - compliance with the legislation in force, - applying the decisions taken by the management of the company, - good functioning of the entity's internal activity, - the reliability of financial information, - the effectiveness of the entity's operations, - efficient use of resources, - preventing and controlling the risks of unmet fixed targets, etc.

The purpose of internal control is aimed at ensuring the coherence of objectives, identifying key success factors and communicating to the company's executives, in real time, performance and outlook information.

Under the accounting rules, the following may be considered: existence of an accounting policy handbook; existence of a procedure for the application of this handbook; existence of controls to ensure compliance with the handbook; knowledge of the evolution of accounting and tax legislation; performance of specific controls on sensitive points; identification and proper treatment of anomalies; software flexibility according to entity's needs; compliance with accounting rules; ensuring the accuracy and completeness of the accounting records; observing the qualitative characteristics of the information contained in the financial

statements so as to meet the needs of the users;

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In 2018 the external financial audit activity was carried out by G5 Consulting SRL, Authorization no. 223/02.07.2002, registered at the Chamber of Financial Auditors of Romania, Trade Reg. No. J12/943/2002, VAT No.: RO 14650690, located in Loc. Dej, str. Alecu Russo nr. 24/2 jud Cluj.

PRINCIPLES, ACCOUNTING POLICIES AND METHODS within Chimcomplex SA Borzesti Handbook of Accounting Policies and Procedures and which formed the basis of the Financial Synthesis Situations at the close of the financial year 2018, were:

- The financial year begins on January 1st and ends on December 31st. - The financial statements for the year ended on 31 December 2018 were established in accordance with the following principles:

- continuity of activity - SC CHIMCOMPLEX SA Borzesti will normally continue its operation, in a foreseeable future without going into the impossibility to continue the activity considering the agreement (contracts) portfolio for 2018; - accounting registration and presentation of the patrimonial items and the results, based on the justifying and legal documents drawn up, according to the legislation in force, thus ensuring the comparability in time of the information; - the permanence of methods - the application of the same rules, methods, rules on the assessment, registration and presentation of the patrimonial items in the accounting, ensuring the comparability of the accounting information in time. - prudence – consideration of value adjustments due to impairment of assets, as well as of all foreseeable liabilities and potential losses that arose during the financial year ended or during an exercise. - accrual accounting - the effects of transactions and other events are recognized when transactions and events occur and are recorded in the financial statements and reported in the financial statements of the period. - separate assessment of assets and liabilities - in order to determine the total value corresponding to a balance sheet position, the value of each individual asset or liability item was determined separately. - intangibility - the opening balance for the 2018 exercise corresponds to the closure balance of the previous exercise (2017). - non-offsetting - the values of the assets that are active were not offset by the values of the items that represent liabilities, i.e. the revenues with the expenses, except for the compensations between allowed assets and liabilities. - the economic prevalence over the legal - the information presented in the financial statements reflects the economic reality of the events and transactions, and not only the legal form. - the assessment at acquisition or production cost, according to which the elements presented in the financial statements are usually assessed on the basis of the cost of acquisition or the cost of production. - the materiality threshold - any element that has a significant value is presented separately in the financial statements.

Accounting treatments: a) at the date of entry into the property the assets are assessed and recorded in the accounting at the entry value, also called accounting value; b) the assessment of the patrimonial items during the inventory was made at market value, taking into account their usefulness and their state; c) At the end of the exercise, property items shall be assessed and reflected in the balance sheet at the value of the input to the patrimony, respectively the accounting value agreed with the results of the inventory; Currency rates denominated in foreign currency were used for the closing rate of 31.12.2018 at the official rate communicated to B.N.R. of 4.6639 lei/euro and 4.0736 lei/USD, published on the website of the Ministry of Public Finance. The exchange differences were recorded on revenue and expenditure respectively. d) Goods are assessed and deducted at the date of exit from the patrimony or when released for consumption.

Intangible assets - Intangible assets recorded in the accounts consist of licenses, software programs recorded at cost

Tangible Assets - Tangible assets consist of land, buildings, constructions, technological installations, machinery, measuring and control devices, means of transport, computer equipment, furniture, office equipment, recorded at own acquisition cost or reassessed or increased value of their value that have been aimed at increasing productivity by improving the parameters of the functioning machines

29

or creating conditions corresponding to the working environment. Tangible fixed assets were recorded at cost.

Depreciation is calculated using the straight-lined method according to Law 15/1994 with further amendments and taking into account the normal duration of the fixed assets functioning according to the Decision no. 2139/2004 for the approval of the Catalogue on the classification and the normal operating durations of the fixed assets.

Expenses with the repair or maintenance of fixed assets made to restore or maintain the value of such assets are recognized in the income statement at the date they are performed.

Financial Assets - Financial assets consist of equity securities of other companies and guarantees to suppliers.

For the cash flow situation, cash and cash equivalents include cash, bank, value and other amounts.

The company's inventories are made up of: raw materials, consumables, inventory items, undergoing production, end products and merchandise. Purchased inventories are recorded at acquisition cost, and products at production cost. Inventory cost is determined by the "first-in, first-out" method (FIFO) and "weighted average cost" (WAC). A. BALANCE ELEMENTS

As a reflection of the state of the company's assets, the balance sheet at the end of the financial exercise describes the assets and liabilities of the company at that time. Assets consist of property owned by the Company and receivables. The liability consists of equity and debt.

thousands of lei

Element name 31.12.2015 31.12.2016 31.12.2017 31.12.2018

TOTAL ASSET, from which: 293,236 282,598 411,090 1,196,040

FIXED ASSETS 243,176 232,616 364,479 899,186

CIRCULATING ASSETS 49,719 49,695 46,275 281,496

- stocks 25,972 26,200 23,686 79,302

- receivables 21,942 22,060 21,183 149,884

- cash and bank accounts 1,805 1,435 1,406 52,310

EXPENSES IN ADVANCE 341 287 335 15,358

TOTAL LIABILITY, from which: 293,236 282,598 411,090 1,196,040

DEBTS–TOTAL, from which: 77,203 61,098 143,495 826,351

- credits/loans 47,995 41,340 60,751 723,834

- trading debts 26,120 16,597 65,651 81,267

- inner-group debts 428 370 10,734 4,897

- staff and social insurance 2,108 2,265 2,704 9,625

- tax debts related to state budget and special funds

412 495 2,869 5,641

- other debts 141 31 786 1,086

PROVISIONS 0 0 766 832

REVENUES/INCOMES IN ADVANCE

29,082 26,350 23,751 45,074

EQUITIES 186,951 195,151 243,078 323,783

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a) Evolution of fixed assets compared to the period 31.12.2017-31.12.2018:

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FIXED ASSETS 31.12.2017 31.12.2018 2018/2017

I. INTANGIBLE ASSETS 238,157 1,060,574 445%

II. TANGIBLE ASSETS 207,241,948 848,422,081 409%

III. FINANCIAL ASSETS 156,999,105 49,702,967 32%

FIXED ASSETS - TOTAL 364,479,210 899,185,622 247%

From the comparative situation of fixed assets in 2018 as compared to 2017, the total value has risen by approximately 150%, but in their structure, the changes are: 300% increase in tangible assets and intangible assets 345% as a result of the acquisition of Oltchim's assets and of diminishing the financial ones due to the collection of the proper performance guarantee in favour of Oltchim. Tangible assets - on groups are presented as follows: lei

TANGIBLE ASSETS 31.12.2017 31.12.2018 %

Lands 53,178,675 81,149,615 153%

Buildings 41,451,187 176,286,160 425%

Technical plants and machineries, equipment 109,608,030 540,953,572 494%

Furniture, office tech, protective equipment 477,539 1,998,496 418%

Biological assets 30,054 26,715 89%

Undergoing downpayments and tangible assets 2,496,463 48,007,523 1923%

TOTAL: 207,241,948 848,422,081 409%

In 2018, the tangible assets recorded the following changes in net worth as of 2017 as a result of the increase in the value of the assets due to the acquisition of Oltchim's assets:

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Account Name Net value increase in 2018

211 Lands 27,970,940

212 Buildings 134,834,973

2131 Technical equipment 346,245,020

2132 Measurement machineries and installations 38,737,275

2133 Transportation means 46,363,247

214 Furniture, office items, other assets 1,520,957

217 Biological assets -3,339

231; 409 Undergoing downpayments and tangible assets 45,511,060

TOTAL 641,180,133

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During 2018 there were increases through acquisitions, refurbishments, buildings, constructions, equipment, machineries, measuring and control devices and asset downpayments. Financial assets The decrease in financial assets, from ROL 156,999 thousand lei to ROL 49,703 thousand lei, was largely due to the unblocking/issuance of bank guarantee letters, created for the purchase of assets from SC Oltchim SA.

b) Evolution of circulating assets:

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Circulating assets 31.12.2015 31.12.2016 31.12.2017 31.12.2018 2018/2017

stocks 25,971,995 26,200,275 23,686,116 79,302,277 335%

receivables 21,942,067 22,060,400 21,182,982 149,883,684 708%

Cash and bank accounts 1,804,954 1,434,526 1,405,914 52,310,219 3721%

Total circulating assets 49,719,016 49,695,201 46,275,012 281,496,180 608%

All circulating assets recorded increase towards 31.12.2017, this was due to asset acquisition transaction from December 2018.

The evolution of circulating assets of 2018 compared to 2017 is as follows:

Stocks Receivables Cash and bank accounts

The value of stocks, respectively the increase at 31.12.2018 with 55.616 thousand RON towards 31.12.2017 detailed on elements is presented as follows:

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

stocuri creante casa si conturi la

banci

31.12.2017 23,686,116 21,182,982 1,405,914

31.12.2018 79,302,277 149,883,684 52,310,219

Evolution of circulating assets

31.12.2017 31.12.2018

32

lei

Stocks 31.12.2017 31.12.2018 2018/2017

Raw materials and materials 10,229,737 22,753,364 222%

Undergoing production 1,301,460 5,923,259 455%

End products and merchandise 12,081,513 48,197,702 399%

Downpayments for stocks 73,406 2,427,952 3308%

Total 23,686,116 79,302,277 335%

In chart, the situation is presented as follows:

Structure of stocks in 2018 compared to 2017 presented as follows:

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Stocks - structure 31.12.2017 31.12.2018

Raw materials 2,591,764 13,078,586

Consumables 6,650,158 6,261,504

Inventory items 147,901 160,723

Packaging 445,271 480,236

Undergoing semi-products and products

1,301,460 5,923,259

Merchandise 586,077 422,404

End products – total 10,277,864 44,551,173

End products at Borzesti, from which:

11,273,953

- Organic products 3,302,219 4,396,785

- Chlorine-Sodium products 3,810,410 2,035,095

- Inorganic chlorine products 3,130,241 4,807,078

End products at Rm.Valcea: 33,277,220

- Organic products 29,309,154

- Chlorine-Sodium products 3,968,066

Other products 1,509,615 5,996,440

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

materii prime_mate

riale

productia in curs

prod.finite si marfuri

avansuri pt.stocuri

31.12.2017 10,229,737 1,301,460 12,081,513 73,406

31.12.2018 22,753,364 5,923,259 48,197,702 2,427,952

Stocks evolution

31.12.2017

31.12.2018

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Downpayments for stocks 176,006 2,427,952

Total 23,686,116 79,302,277

From the abovementioned analysis, increases in all stock categories are observed, less the consumables.

At receivables, increases are recorded on the following structure:

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Receivables 31.12.2017 31.12.2018 2018/2017

Commercial receivables 15,919,225 27,453,873 172%

Amounts to be cashed from affiliated companies 3,588,098 23,056,932 643%

Other receivables 1,675,659 99,372,879 5930%

Total 21,182,982 149,883,684 708%

Situation of receivables to be cashed from member companies from the SCR Group is as follows:

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Company name Total Customers Affiliated entities

Miscellaneous debtors Affiliated entities

Granted loans Affiliated entities

Interests to be cashed from affiliated entities

Advances granted to affiliated entities

Uncertain customers

Uzuc SA Ploiesti 1,204,493 1,204,493

A6 Impex 570,538 570,538

Caromet Caransebes 1,119,691 948,780 35,672 135,239

Eurohouse Com 95,872 11,861 84,011

Iasitex 1,423 1,423

Novatextile Bumbac 174,450 1,000 173,450

C.R.C. Impex Chemicals 19,038,680 19,038,680

SCR SA 0

Sinterom SA 1,984 1,984

Somes Dej 1,151,022 8,400 5,855 1,033,837 102,930

Vitoria Serv Iasi 41,400 41,400

Total 23,399,554 19,049,064 42,400 948,780 54,811 3,201,569 102,930

The evolution of commercial receivables and other receivables, on types/fields of activities and

sectors, at the end of 2018 towards 2017, is as follows:

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RECEIVABLES 2017 2018 2018-2017

COMMERCIAL RECEIVABLES, Total 15,919,225 27,453,873 11,534,648

Internal customers, from which: 9,182,455 12,039,929 2,857,474

User: metal industry 621,236 2,108,072 1,486,836

User – food industry 109,796 0 -109,796

User – energy industry 352,766 107,369 -245,397

User – public service providers 3,987,366 3,131,617 -855,749

User – petrol and chemical industry 1,058,046 3,374,538 2,316,492

User – chemical industry 662,085 0 -662,085

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External customers – total, from which:

5,412,097 4,206,471 -1,205,626

User – distribution and trade - Hungary 40,574 188,363 147,789

User - distribution and trade Poland 151,133 0 -151,133

User - distribution and trade Moldavian R. 3,651,580 3,485,435 -166,145

User - distribution and trade Slovenia 593,125 217,842 -375,283

User - distribution and trade Netherlands 0 79,443 79,443

User - distribution and trade Bulgaria 310,673 116,071 -194,602

Uncertain customers – total, from which:

1,301,355 1,207,561 -93,794

User - distribution and trade Rm. Valcea 12,936 12,936 0

User - distribution and trade - Bacau 0 0 0

User - distribution and trade Bucuresti 116,934 24,524 -92,410

User - distribution and trade - Moinesti 723,288 723,288 0

User - agriculture Braila 225,480 225,480 0

User - distribution and trade Calarasi 10,109 10,109 0

Advances service providers 215,380 8,393,427 8,178,047

Other commercial receivables - warranties

1,258,782 2,814,046

1,555,264

Provisions for commercial receivables depreciation -1,450,844 -1,207,561 243,283

OTHER RECEIVABLES 1,675,659 99,372,879 97,697,220

- VAT return 0 96,455,420 96,455,420

- Undue VAT 1,598,579 2,345,150 746,571

- Miscellaneous debtors 51,353 64,352 12,999

- other receivables 25,727 507,957 482,230

Commercial receivables in 2018 recorded an increase of about 70%, as resulted from the above

table. Commercial receivables are covered, mainly, with cashing effects (CECs, Orders) with cash terms

according to contractual clauses. The money availability within the accounts of the company at the beginning, respectively the end of the financial exercise 2018, is presented as follows:

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Cash and bank accounts 31.12.2017 31.12.2018

Bank accounts 675,512 51,816,622

CECs to be cashed 718,342 481,983

Cash 4,652 671

Other cash availability 7,408 10,943

TOTAL 1,405,914 52,310,219

Of the available in the accounts we mention in particular: 23,568 thousand RON - Warehouse closure Rm.Valcea, as well as 17,300 thousand RON from unlocking guarantee letter established for Oltchim asset purchase. c) Debt evolution:

Analysing the debt situation as at 31.12.2018, the total debt level increased as of 31.12.2017, the situation is presented as follows:

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DEBTS 31.12.2017 31.12.2018 2018/2017

TOTAL, from which: 143,495,004 826,350,719 576%

- credits/loans 60,750,993 723,834,379 1191%

- commercial debts 65,651,101 81,267,474 124%

- inner group debts 10,733,947 4,896,603 46%

- staff and social insurances 2,704,014 9,625,001 356%

- Tax debts related to state budget and special funds

2,868,888 5,641,274 197%

- other debts 786,061 1,085,988 138%

Commercial debts compared are detailed as follows:

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DEBTS from which: 2017 2018 2018-2017

COMMERCIAL DEBTS TOTAL 65,651,101 81,267,474 15,616,373

Internal providers – total, from which:

23,958,860 42,505,208 18,546,348

Electrical energy 8,835,467 14,825,136 5,989,669

Salt solution 2,128,770 1,716,064 -412,706

Methane gas 6,281,362 6,877,431 596,069

Port rendering 112,458 61,901 -50,557

Merchandise transportation 599,199 1,377,522 778,323

Chalk stones 402,374 498,511 96,137

Methanol 412,558 2,499,875 2,087,317

External providers – total, from which:

2,283,159 1,267,226 -1,015,933

Tank truck 136,205 51,333 -84,872

Carbide 0 0 0

Consultancy services 253,300 794,672 541,372

Acetone 83,419 0 -83,419

Spares 822,760 6,418 -816,342

Packaging 66,831 85,792 18,961

Maintenance services 571,038 56,699 -514,339

Fixation providers – total, from which:

863,894 269,043 -594,851

Material providers for investments 224,551 94,397 -130,154

Construction works providers 39,735 0 -39,735

Protection, rubbering work providers

224,701 0 -224,701

Mechanics 4,582 0 -4,582

Biocide authorized providers 0 60,048 60,048

Unreceived invoice providers – total, from which:

9,545,937 13,145,624 3,599,687

Electrical energy 5,717,035 2,281,087 -3,435,948

Consultancy services 0 214,142 214,142

Consultancy services 0 182,598 182,598

Methane gas 3,429,715 7,305,558 3,875,843

Advances cashed in order account

28,999,251 24,080,373 -4,918,878

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Amounts owed to companies from the group:

Company Total LEI

Providers Affiliated entities

Fixed providers Affiliated entities

Advances received from affiliated entities

C.R.C.Impex 833 833

A2 Impex SRL Ploiesti 0

A4 Impex Onesti 10,856 10,856

A 5 Invest 631,938 631,938

A6 Impex SRL Dej 2,773,109 2,773,109

AISA Invest Cluj 278,368 278,368

Caromet Caransebes 0

Contactoare Buzau 0

Iasitex SA Iasi 25,192 25,192

Inav SA Bucuresti 13,202 13,202

Serviciili Comerciale Romane 1,116,487 1,116,487

Eurohouse Com 0

Uzuc SA 43,487 43,487

Somes Dej 3,131 3,131

Total 4,896,603 2,080,007 43,487 2,773,109

At the chapter amounts owed to company’s employees, social insurances, tax debts and other debts, the situation is the following:

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Total staff and social insurances 9,625,001

- Staff – owed salaries 3,649,224

- Staff – material help 63,575

- Withdrawal from owed salaries to thirds 42,325

- Other debts related with the staff 45,658

- Social insurances 5,492,574

- Unemployment help 331,645

- Other debts and social receivables 0

Total tax debts related to state budget and special funds

5,641,274

- income tax 4,024,544

- salary tax 999,347

- VAT 0

- other taxes and charges and related payments 142,244

- Special funds 48,806

- Other debts towards the state budget 426,333

Total other debts 1,085,988

- floating assets 30,800

- payment dividends 754,177

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- diverse creditors 301,011

Of staff debts, 3.649 thousand lei represents the salaries afferent to December 2018 paid in January 2018 and the debts towards the state institutions are current, with the due date on January 25th, 2019.

Amounts owed to credit institutions and other loans: The credit situation and other loans in balance at 31.12.2018 of SC CHIMCOMPLEX SA Borzesti is

the following:

Credit/loan type bank currency Year 2017 year 2018 RAIFFEISEN BANK:

- credit line lei 5,000,000 0 - credit investments SODA M euro 0 0 - credit investments COGENERARE II lei 3,130,172 0 - credit investments Saleduct lei 2,479,390 0 - credit investments 2015 lei 2,725,078 0 PIRAEUS BANK:

- credit line lei 18,500,000 0 BANC POST:

- credit line lei 7,000,000 0 TRICON Energy

- loan usd 5,820,750 5,820,750 VTB Bank (Europe) -TL euro

94,000,000

VTB Bank (Europe) - revolving euro

15,000,000 Credit Suisse International -TL euro

40,000,000

In December 2018, all credits towards the Romanian banks have been reimbursed and contracted from VTB (Europe) and Credit Suisse Internationale to purchase Oltchim assets.

In 2018, Constituted provisions are as follows:

“Other provisions” for salary rights afferent to 2018 = 832.154 lei. Provisions for impairment of customer receivables = 744 lei, Provisions for impairment of debtors' receivables = 3.849 lei,

And the yearly provisions are as follows: Provisions for impairment of customer receivables = 124.536 lei. “Other provisions” for salary rights afferent to 2018 = 765.679 lei, Adjustments for the depreciation of goods = 1.016 lei. At REVENUES IN ADVANCE from the balance, at 31.12.2018 in total amount of 45.074.270 lei amount of 23.568.956 lei (5,14 million euro) represents the waste warehouse closure fund Rm. Valcea and 21.341.739 lei subventions for investments, amounts to be resumed at afferent revenues/incomes. From which by EU structural funds:

a) Project financed by POS CCE, financing agreement no.7.EE/06.01.2012: „Imbunatatirea eficientei energetice la electroliza cu membrana la Chimcomplex Borzesti”, balance 5.907.775 lei,

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b) Project financed by POS CCE, financing agreement no.29EE/22.04.2013: “Instalatie de Cogenerare II”, balance 14.777.777 lei.

B. PROFIT AND LOSS ACCOUNT

The profit and loss account express the income and expense flows recorded by the company in the financial year 2018 and their profitability at the year-end.

The profit and loss account summarize the economic results of the operating activity and the financial activity.

The situation of the main indicators reflecting the results of 2018 compared to the previous years is presented below:

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INDICATORS 2015 2016 2017 2018 2018/2017

Sold production 192,553,261

180,222,398

239,953,755

285,927,969 119%

Net turnover 193,836,735

184,130,073

242,476,720

294,300,863 121%

OPERATING INCOME - TOTAL 203,766,251

186,688,560

258,158,376

343,745,186 133%

OPERATING EXPENSES - TOTAL 186,381,625

175,792,750

220,697,748

291,518,088 132%

OPERATING PROFIT 17,384,626 10,895,810 37,460,628 52,227,098 139%

FINANCIAL INCOME - TOTAL 2,136,697 1,992,175 3,295,685 4,254,572 129%

FINANCIAL EXPENSES - TOTAL 6,568,096 3,710,617 4,683,820 17,515,396 374%

FINANCIAL LOSS 4,431,399 1,718,442 1,388,135 13,260,824 955%

TOTAL INCOMES 205,902,948

188,680,735

261,454,061

347,999,758 133%

TOTAL EXPENSES 192,949,721

179,503,367

225,381,568

309,033,484 137%

GROSS PROFIT 12,953,227 9,177,368 36,072,493 38,966,274 108%

INCOME TAX 0 977,341 4,819,123 6,279,885 130%

NET RESULT: PROFIT 12,953,227 8,200,027 31,253,370 32,686,389 105%

In 2018, compared with 2017, turnover grew by 21%. Given that in 2018 the operating income level

is 33% higher than in 2017 and the operating expenses have increased by 32% compared to the previous year, there is an operating profit of 52,227 thousand lei compared to 37,461 thousand lei achieved in 2017 - 39% increase.

39

a) Operating activity

1. operating incomes achieved in 2018 were of 343.745 thousand lei, with the following structure: - turnover 294.301 thousand lei

lei

Turnuver structure 2018 CA percentage

TOTAL TURNOVER, from which: 294,300,863 100%

Selling of end products 286,110,875 97.22%

Income from services rendered 1,956,846 0.66%

Merchandise selling 8,372,894 2.85%

End product sales Residual product sales Service rendering incomes Rent incomes Diverse activities incomes Merchandise sales - Other incomes in amounts of 49.444 thousand lei, din care: 1.137 thousand lei - income from the

production of fixed assets, 2,292 thousand lei - part of the subsidies for investments transferred to income,

0

100,000,000

200,000,000

300,000,000

400,000,000

Venituri din exploatare

Cheltuieli de exploatare

Profit din exploatare

2017 258,158,376 220,697,748 37,460,628

2018 343,745,186 291,518,088 52,227,098

Evolution of operating result 2018

2017 2018

Turnover structure 2018

vanzarea produselor finite

vanzarea produse reziduale

venituri din prestari servicii

venituri din chirii

venituri din activ.diverse

vanzarea marfurilor

40

from the sale of assets and other capital operations, 10,505 thousand lei, the stock change 35,384 thousand lei (increase of stocks) and other income.

2.Operating expenses structure achieved in 2018 is as follows:

1. Raw materials, materials and energy expenses

lei

2017 2018 2018/2017

% in operating expenses

Total from which: 117,178,737 165,524,876 141% 56.78%

Raw materials expenses 27,715,808 54,429,210 196% 18.67%

Consumables expenses 41,108,344 41,455,515 101% 14.22%

- from which, natural gas Borzesti 29,395,264 35,011,161 119% 12.01%

Expenses on other materials 481,055 721,377 150% 0.25%

Expenses on packaging 1,590,783 1,830,719 115% 0.63%

Expenses with merchandises 2,020,943 7,653,251 379% 2.63%

Expenses on energy and water: 44,261,804 59,434,804 134% 20.39%

- electrical energy 42,944,597 50,542,065 118% 17.34%

- thermal energy

3,908,055 1.34%

- natural gas Rm.V 2,489,300 0.85%

2.Staff expenses - in 2018 increased with 50% towards 2017 due to hiring beginning as of 08.12.2018 with number of 1.247 employees for Rm. Valcea branch.

2017 2018 2018/2017

% in operating expenses

Total staff expenses: 42,468,170 64,216,133 151% 22.03%

Staff salary expenses 32,639,244 59,469,010 182% 20.40%

Meal tickets 1,398,195 1,667,433 119% 0.57%

Social insurance and protection expenses 8,430,731 3,079,690 37% 1.06%

41

2. Structure of other operating expenses, is as follows:

lei

2017 2018 2018/2017

% in operating expenses

Expenses on amortization of fixed assets 16,468,831 15,316,452 93% 5.25%

Maintenance and repair expenses 5,919,844 5,702,438 96% 1.96%

Rental expenses 1,018,039 5,515,189 542% 1.89%

Insurance expenses 254,448 881,447 346% 0.30%

Expenses with studies and research 229,938 59,514 0% 0.02%

Expenses on staff training 218,290 37,323 0% 0.01%

Expenses with fees 1,763,718 550,306 31% 0.19%

Protocol expenses 390,779 509,174 130% 0.17%

Expenses with transportation of goods and people 11,879,610 12,422,694 105% 4.26%

Travel expenses 360,592 466,811 129% 0.16%

Postage, telephone, internet 143,225 134,600 94% 0.05%

Service Fees. banking 581,451 2,309,010 397% 0.79%

Other expenses on services performed by third parties 15,612,442 9,717,810 62% 3.33%

Expenses with other taxes and fees 1,367,152 2,210,863 162% 0.76%

Losses from receivables and various debtors 141,591 94,570 67% 0.03%

Other operating expenses 3,507,060 5,588,242 159% 1.92%

Total cheltuieli cu personalul:

Cheltuieli cu salariile personalului

Tichete de masa Cheltuieli cu

asigurările şi protecţia socială

2017 42,468,170 32,639,244 1,398,195 8,430,731

2018 64,216,133 59,469,010 1,667,433 3,079,690

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

Evolutia of salary expenses 2018 vs 2017

2017 2018

42

b) Financial activity

Continuous tracking of financial result in order to reduce the cost of financing as a level of interest and commissions, the use of financial instruments on the market is a priority objective for Chimcomplex.

lei

INDICATORS 2017 2018

FINANCIAL INCOMES 3,295,685 4,254,572

FINANCIAL EXPENSES 4,683,820 17,515,396

FINANCIAL RESULT -1,388,135 -13,260,824

Structure of comparative profit in 2018 towards 2017 is presented as follows:

lei

RESULTS 2017 2018

Operating profit 37,460,628 52,227,098

Financial loss 1,388,135 13,260,824

Gross profit 36,072,493 38,966,274

Net profit 31,253,370 32,686,389

In 2018 a net profit of 32.686 thousand lei was obtained, compared to 32.862 thousand lei forecasted in the Income and Expense Budget of 2018, and compared to 31.253 thousand lei net profit achieved in 2017.

Profit din exploatare

Pierdere financiara Profit brut Profit net

AN 2017 37,460,628 -1,388,135 36,072,493 31,253,370

AN 2018 52,227,098 -13,260,824 38,966,274 32,686,389

-5,000,000

5,000,000

15,000,000

25,000,000

35,000,000

45,000,000

55,000,000

65,000,000

RES

ULT

S

43

c). Cashflow

lei

Element name 2018

+ Net profit ( +) or loss (-) 32,686,389

+ Amortisation and provisions 15,316,452

- Stocks variation (+/-) 55,616,161

- Receivables variation (+/-) 128,700,702

+ Provider variation (+/-) 14,697,907

+ Creditor customer variation (+/-) -4,918,878

+ Other debts variation (+/-) 10,921,103

+ = Cashflow from operating activity (A) -115,613,890

+ Amounts from selling and valuing assets and fixed means 10,505,188

- Investments in tangible assets, total, from which: 652,137,704

- Purchase of fixed means + other expense investments 651,000,550

- Performed on its own 1,137,154

-

Financial investments -107,296,138

+ = Cashflow from investment activity (B) -534,336,378

+ Variation of amounts owed to credit institutions 662,155,583

+ Contribution to company capital 42,522,378

+ Capital premiums 844,028

- Dividend payments 13

+ = Cashflow from financial activity (C) 705,521,976

- Variation of other asset elements 4,887,441

+ Variation of other liability elements 220,038

+ = Cashflow from other activities (D) -4,667,403

+ Monies availability at the start of the period 1,405,914

+ Net cashflow (A+B+C+D) 50,904,305

= Monies availability at the end of the period 52,310,219

THE BOARD OF DIRECTORS, VUZA STEFAN – Chairman